GIC and investment firm KKR co-invest $940m in Philippine hospital group

The consortium will subscribe to $136.67m worth of 41.3 million new common shares.

Sovereign wealth fund GIC and investment firm KKR have signed a definitive agreement with Metro Pacific Investments Corporation (MPIC) to co-invest $940m (US$686.7m) into Metro Pacific Hospital Holdings, according to an announcement by KKR.

The deal will proceed through a series of investments in common shares of Metro Pacific Hospitals and through mandatorily exchangeable bonds issued by MPIC.

GIC will restructure its current investment in the company and will re-invest alongside KKR, the announcement said. KKR will make the investment from its Asian Fund III.

The consortium will subscribe to $136.67m (US$100m) worth of more than 41.36 million new common shares in Metro Pacific Hospitals equivalent to 6.25% of the aggregate par value of the company.

Proceeds are expected to support Metro Pacific Hospitals’ plans for additional hospitals and new healthcare businesses. The capital will also be used to grow its existing subsidiaries, associates, and joint ventures, according to the press release.

The consortium will also invest in a $793.85m (US$580m) mandatorily exchangeable bond issued by MPIC. The exchangeable bond will grant the consortium the right to exchange the bond for 239.93 million common shares in Metro Pacific Hospitals after 10 years or an initial public offering. MPIC will use the proceeds of the bond to reduce its bank borrowings.

The transactions are expected to complete by the end of 2019.

With interests in 14 hospitals and approximately 3,200 beds across the Philippines, Metro Pacific Hospitals said that it is the operator of the largest private hospitals and healthcare network in the Philippines in terms of authorised bed capacity and revenue.

"[KKR]’s cash infusion into Metro Pacific Hospitals will enable us to further grow our network, on our way to our new target of 5,000 beds and 30 hospitals before 2030,” said Augusto Palisoc Jr., president and CEO of Metro Pacific Hospitals.

In addition to Metro Pacific Hospitals, KKR has invested in leading technology company Voyager Innovations in the Philippines.

Bank of America Merrill Lynch and UBS are the financial advisors of MPIC and GIC. Milbank LLP and Picazo Buyco Tan Fider & Santos are the legal counsels to MPIC and GIC. Meanwhile, Simpson Thacher & Bartlett LLP, and Sycip Salazar Hernandez & Gatmaitan are KKP’s legal counsels for the investment.

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